Devon Energy Earns $499 Million on Increased Third-Quarter Oil and Gas Production and Lower Costs
Download
Production of oil, natural gas and natural gas liquids increased six percent to 61.9 million oil-equivalent barrels (Boe) in the third quarter of 2009. Costs in nearly every expense category were lower in the third quarter of 2009 compared with the same period in the previous year. Strong production growth and lower overall costs were more than offset by significantly lower product prices.
For the nine months ended
"Year to date, Devon increased oil and gas production eight percent compared with 2008," commented President
Minimal Impact from Items Not Estimated by Analysts
Devon's third-quarter 2009 financial results were increased slightly by the net effects of items securities analysts typically exclude from their published estimates. Excluding the adjusting items, Devon earned
Companywide Production Increased
Combined oil, gas and natural gas liquids production averaged 673 thousand Boe per day in the third quarter of 2009. This is the highest third-quarter production in Devon's history and a six percent increase compared with the third quarter of 2008.
Each of Devon's operating segments contributed to the production growth. Growth in oil and natural gas liquids production in
Sequentially, average daily oil and gas production in the third quarter decreased six percent when compared with 719 thousand Boe per day produced in the second quarter of 2009. The decrease is attributable to voluntary reductions, planned maintenance downtime and natural declines.
Revenues from oil, gas and natural gas liquids sales decreased 54 percent to
Other income, net of expenses, increased 17 percent to
Haynesville Shale Success Leads Operational Highlights
Devon drilled 233 wells in the third quarter of 2009 compared with 636 wells drilled in the third quarter of 2008. In both periods, approximately 97 percent of the wells were successful. In spite of significantly reduced drilling activity in 2009, Devon achieved several notable operational accomplishments in the third quarter:
-- In the third quarter of 2009 Devon commenced completion operations on
its first Haynesville Shale well to be drilled in San Augustine County,
Texas . The Kardell Gas Unit 1H flowed at an average continuous 24-hour
rate of 30.7 million cubic feet of natural gas equivalent per day. Devon
operates the well with a 48 percent working interest.
-- The company is currently drilling another well on its east Texas
Haynesville Shale acreage. This well is located in Shelby County ,
northwest of the Kardell well.
-- Also in the third quarter, Devon added two operated drilling rigs at its
Cana Woodford Shale play in western Oklahoma . The company commenced
production from eight additional Cana wells in the quarter, bringing its
net production in the play to 53 million cubic feet of gas equivalent
per day.
-- Following scheduled facilities maintenance in the third quarter, Devon
has resumed ramping up production from its 100 percent-owned Jackfish
oil sands project in Alberta . Currently, Jackfish is producing
approximately 31,000 barrels of oil per day and is expected to reach its
facilities-design capacity of 35,000 barrels per day by year end.
-- Construction of the second phase of the Jackfish project, Jackfish 2,
passed the 50 percent completion milestone in the third quarter. Devon
expects Jackfish 2, which is also sized to produce 35,000 barrels per
day, to commence steam injection in 2011.
-- Devon completed evaluation of a third phase of the Jackfish project in
the third quarter. The company plans to file a regulatory application
for Jackfish 3 in 2010. In aggregate, the three phases of Jackfish are
expected to produce more than 100,000 barrels of oil per day from
approximately 900 million barrels of recoverable resource.
-- In the Gulf of Mexico , Devon has encountered an encouraging oil column
in an appraisal well on the Lower Tertiary Kaskida prospect. The company
is now evaluating options including a possible side-track of the well.
Devon has a 30 percent working interest in Kaskida.
Costs Decline in Most Expense Categories
Devon continued to report favorable cost comparisons in the third quarter of 2009 versus the year-ago quarter. The company reduced lease operating expenses (LOE) 15 percent, to
Compared with the third quarter of 2008, depreciation, depletion and amortization (DD&A) of oil and gas properties decreased 39 percent to
The company also reduced general and administrative expenses (G&A) in the most recent quarter. G&A decreased by seven percent to
Interest expense increased by 30 percent to
Income Taxes Reduced by Adjustments
Third-quarter 2009 income tax expense was reduced by
Maintaining Financial Strength
Cash flow before balance sheet changes reached
At
Items Excluded from Published Earnings Estimates
Devon's reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the company's financial results. These items and their effects upon reported earnings for the third quarter of 2009 were as follows:
Items affecting continuing operations-
-- A change in the fair value of oil and natural gas derivative instruments
decreased third-quarter earnings by $104 million pre-tax ($67 million
after tax).
-- A change in the fair value of other financial instruments decreased
third-quarter earnings by $9 million pre-tax ($6 million after tax).
-- Income tax accrual adjustments increased third-quarter earnings by $59
million .
-- Income tax benefits related to unsuccessful international drilling
increased third-quarter earnings by $22 million .
The following table summarizes the effects of these items on third-quarter earnings and income taxes.
Summary of Items Typically Excluded by Securities Analysts (in millions)
Quarter Ended September 30, 2009
Continuing Operations
Cash Flow
Before
After Balance
Pre-tax Income Tax Effect tax Sheet
Earnings -------------------------- Earnings Changes
Effect Current Deferred Total Effect Effect
------ ------- -------- ----- ------ ------
Change
in fair
value of
oil and gas
derivative
instruments $(104) - (37) (37) (67) -
Change in
fair value
of other
financial
instruments (9) - (3) (3) (6) -
Income tax
accrual
adjustment - (9) (50) (59) 59 9
Income tax
benefits on
international
drilling - (22) - (22) 22 22
----- --- --- ---- --- ---
Totals $(113) (31) (90) (121) 8 31
----- --- --- ---- --- ---
In aggregate, these items increased third-quarter 2009 net earnings by
Conference Call to be Webcast Today
Devon will discuss its third-quarter 2009 financial and operating results in a conference call webcast today. The webcast will begin at
This press release includes "forward-looking statements" as defined by the
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION (net of royalties) Quarter Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Total Period Production
-----------------------
Natural Gas (Bcf)
U.S. Onshore 171.7 172.1 535.9 486.9
U.S. Offshore 12.2 12.5 33.5 45.0
---- ---- ---- ----
Total U.S. 183.9 184.6 569.4 531.9
Canada 58.5 53.8 171.3 158.5
International 0.4 0.5 1.0 1.5
------------- --- --- --- ---
Total Natural Gas 242.8 238.9 741.7 691.9
----------------- ----- ----- ----- -----
Oil (MMBbls)
U.S. Onshore 2.8 2.6 8.6 8.3
U.S. Offshore 1.5 1.3 3.8 4.9
--- --- --- ---
Total U.S. 4.3 3.9 12.4 13.2
Canada 5.8 5.5 18.7 15.4
International 3.7 2.7 11.6 10.8
------------- --- --- ---- ----
Total Oil 13.8 12.1 42.7 39.4
--------- ---- ---- ---- ----
Natural Gas Liquids (MMBbls)
U.S. Onshore 6.6 5.5 19.2 17.1
U.S. Offshore 0.1 0.1 0.5 0.5
--- --- --- ---
Total U.S. 6.7 5.6 19.7 17.6
Canada 0.9 1.0 2.8 3.0
International - - - -
------------- --- --- --- ---
Total Natural Gas Liquids 7.6 6.6 22.5 20.6
------------------------- --- --- ---- ----
Oil Equivalent (MMBoe)
U.S. Onshore 37.9 36.8 117.1 106.5
U.S. Offshore 3.7 3.5 9.9 12.9
--- --- --- ----
Total U.S. 41.6 40.3 127.0 119.4
Canada 16.5 15.5 50.1 44.8
International 3.8 2.8 11.8 11.1
------------- --- --- ---- ----
Total Oil Equivalent 61.9 58.6 188.9 175.3
-------------------- ---- ---- ----- -----
Average Daily Production
------------------------
Natural Gas (MMcf)
U.S. Onshore 1,865.9 1,871.0 1,963.0 1,777.1
U.S. Offshore 133.1 135.9 122.7 164.3
----- ----- ----- -----
Total U.S. 1,999.0 2,006.9 2,085.7 1,941.4
Canada 635.8 584.9 627.4 578.4
International 4.2 5.6 3.6 5.4
------------- --- --- --- ---
Total Natural Gas 2,639.0 2,597.4 2,716.7 2,525.2
----------------- ------- ------- ------- -------
Oil (MBbls)
U.S. Onshore 30.3 28.8 31.8 30.2
U.S. Offshore 16.4 13.8 13.8 17.9
---- ---- ---- ----
Total U.S. 46.7 42.6 45.6 48.1
Canada 62.8 59.3 68.4 56.3
International 40.9 29.7 42.6 39.6
------------- ---- ---- ---- ----
Total Oil 150.4 131.6 156.6 144.0
--------- ----- ----- ----- -----
Natural Gas Liquids (MBbls)
U.S. Onshore 71.0 59.7 70.2 62.4
U.S. Offshore 1.4 1.1 1.9 1.7
--- --- --- ---
Total U.S. 72.4 60.8 72.1 64.1
Canada 9.9 11.2 10.5 10.9
International - - - -
------------- --- --- --- ---
Total Natural Gas Liquids 82.3 72.0 82.6 75.0
------------------------- ---- ---- ---- ----
Oil Equivalent (MBoe)
U.S. Onshore 412.3 400.4 429.1 388.8
U.S. Offshore 40.0 37.6 36.2 46.9
---- ---- ---- ----
Total U.S. 452.3 438.0 465.3 435.7
Canada 178.7 168.0 183.5 163.6
International 41.6 30.6 43.2 40.5
------------- ---- ---- ---- ----
Total Oil Equivalent 672.6 636.6 692.0 639.8
-------------------- ----- ----- ----- -----
BENCHMARK PRICES Quarter Ended Nine Months Ended
(average prices) September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Natural Gas ($/Mcf) - Henry Hub $3.39 $10.25 $3.93 $9.74
Oil ($/Bbl) - West Texas
Intermediate (Cushing) $68.25 $118.52 $57.09 $113.49
--------------------------- ------ ------- ------ -------
REALIZED PRICES
(excludes the effects of unrealized gains and losses from hedging)
Quarter Ended
September 30, 2009 Oil Gas NGLs Total
(Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
--------- --------- --------- ---------
U.S. Onshore $64.48 $2.77 $24.49 $21.48
U.S. Offshore $65.99 $3.49 $28.34 $39.67
Total U.S. $65.01 $2.82 $24.56 $23.09
Canada $55.10 $2.91 $33.81 $31.62
International $65.94 $5.90 $ - $65.42
------------- ------ ----- --- ------
Realized price without
hedges $61.12 $2.84 $25.67 $27.97
Cash settlements $ - $0.53 $ - $2.05
---------------- --- ----- --- -----
Realized price, including
cash settlements $61.12 $3.37 $25.67 $30.02
-------------------------- ------ ----- ------ ------
Quarter Ended
September 30, 2008 Oil Gas NGLs Total
(Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
-------- -------- -------- --------
U.S. Onshore $116.26 $8.48 $51.24 $55.65
U.S. Offshore $123.78 $11.05 $65.35 $87.42
Total U.S. $118.70 $8.66 $51.50 $58.38
Canada $92.98 $9.36 $72.19 $70.24
International $117.97 $10.72 $ - $116.34
------------- ------- ------ --- -------
Realized price without
hedges $106.95 $8.82 $54.72 $64.29
Cash settlements $(0.01) $(1.01) $ - $(4.10)
---------------- ------ ------ --- ------
Realized price, including
cash settlements $106.94 $7.81 $54.72 $60.19
------------------------- ------- ----- ------ ------
Nine Months Ended
September 30, 2009 Oil Gas NGLs Total
(Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
-------- ------- -------- --------
U.S. Onshore $51.04 $2.99 $20.98 $20.86
U.S. Offshore $56.19 $4.11 $23.51 $36.64
Total U.S. $52.60 $3.05 $21.04 $22.09
Canada $43.42 $3.51 $30.20 $29.94
International $55.23 $4.65 $- $54.85
----------------------- ------ ----- --- ------
Realized price without hedges $49.30 $3.16 $22.21 $26.21
Cash settlements $- $0.48 $- $1.90
---------------- --- ----- --- -----
Realized price, including
cash settlements $49.30 $3.64 $22.21 $28.11
---------------- ------ ----- ------ ------
Nine Months Ended
September 30, 2008 Oil Gas NGLs Total
(Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
-------- -------- ------- ---------
U.S. Onshore $110.07 $8.34 $48.81 $54.51
U.S. Offshore $115.12 $10.25 $54.80 $81.65
Total U.S. $111.94 $8.50 $48.96 $57.43
Canada $87.28 $8.90 $70.00 $66.16
International $108.73 $9.95 $- $107.63
----------------------- ------- ----- --- -------
Realized price without hedges $101.42 $8.60 $52.03 $62.84
Cash settlements $- $(0.80) $- $(3.15)
---------------- --- ------ --- ------
Realized price, including
cash settlements $101.42 $7.80 $52.03 $59.69
------------------ ------- ----- ------ ------
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
Quarter Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues
--------
Oil sales $845 $1,296 $2,107 $4,001
Gas sales 691 2,107 2,344 5,947
NGL sales 195 362 501 1,069
Net gain (loss) on oil and gas
derivative financial instruments 23 1,592 190 (411)
Marketing and midstream
revenues 344 621 1,074 1,895
--------- --- --- ----- -----
Total revenues 2,098 5,978 6,216 12,501
-------------- ----- ----- ----- ------
Expenses and other income, net
------------------------------
Lease operating expenses 505 591 1,539 1,634
Production taxes 61 152 150 462
Marketing and midstream
operating costs and expenses 244 452 707 1,349
Depreciation, depletion
and amortization of
oil and gas properties 480 781 1,573 2,280
Depreciation and
amortization of non-oil
and gas properties 65 67 209 186
Accretion of asset
retirement obligations 25 22 73 66
General and administrative
expenses 137 146 485 474
Interest expense 90 69 263 261
Change in fair value
of other financial instruments (5) 46 (20) 22
Reduction of carrying
value of oil and gas
properties - - 6,516 -
Other income, net (96) (83) (69) (121)
----------------- --- --- --- ----
Total expenses and
other income, net 1,506 2,243 11,426 6,613
----------------------- ----- ----- ------ -----
Earnings (loss) from
continuing operations
before income taxes 592 3,735 (5,210) 5,888
-------------------- --- ----- ------ -----
Income tax expense (benefit)
---------------------------
Current 102 226 155 743
Deferred (9) 1,000 (2,203) 1,391
-------- --- ----- ------- -----
Total income tax
expense (benefit) 93 1,226 (2,048) 2,134
----------------- --- ----- ------- -----
Earnings (loss) from
continuing operations 499 2,509 (3,162) 3,754
---------------------- --- ----- ------ -----
Discontinued operations
-----------------------
Earnings from discontinued
operations before income taxes - 93 16 1,133
Discontinued operations
income tax expense (benefit) - (16) - 219
----------------------------- --- --- --- ---
Earnings from discontinued
operations - 109 16 914
-------------------------- --- --- --- ---
Net earnings (loss) 499 2,618 (3,146) 4,668
Preferred stock dividends - - - 5
------------------------- --- --- --- ---
Net earnings (loss)
applicable to common
stockholders $499 $2,618 $(3,146) $4,663
------------- ---- ------ ------- ------
Basic net earnings (loss)
per share
Basic earnings (loss) from
continuing
operations per share $1.13 $5.68 $(7.12) $8.45
Basic earnings from
discontinued operations
per share $- $0.25 $0.03 $2.05
--------- --- ----- ----- -----
Basic net earnings
(loss) per share $1.13 $5.93 $(7.09) $10.50
---------------- ----- ----- ------ ------
Diluted net earnings (loss)
per share
Diluted earnings (loss)
from continuing
operations per share $1.12 $5.64 $(7.12) $8.37
Diluted earnings
from discontinued
operations per share $- $0.24 $0.03 $2.03
-------------------- --- ----- ----- -----
Diluted net earnings
(loss) per share $1.12 $5.88 $(7.09) $10.40
------------------ ----- ----- ------ ------
CONSOLIDATED BALANCE SHEETS
(in millions) September 30, December 31,
2009 2008
---- ----
Assets (Unaudited)
------ ----------
Current assets
--------------
Cash and cash equivalents $905 $379
Accounts receivable 1,142 1,412
Income taxes receivable 47 334
Derivative financial instruments, at fair value 131 282
Other current assets 384 277
-------------------- --- ---
Total current assets 2,609 2,684
-------------------- ----- -----
Property and equipment, at cost, based on the
full cost method of accounting for oil and gas
properties ($4,443 million and $4,551
million excluded from amortization in 2009
and 2008, respectively) 61,375 55,664
Less accumulated depreciation,
depletion and amortization 42,503 32,683
-------------------------- ------ ------
Property and equipment, net 18,872 22,981
--------------------------- ------ -----
Goodwill 5,929 5,579
Other long-term assets, including $167 million and
$199 million at fair value
in 2009 and 2008, respectively 731 664
------------------------------ --- ---
Total Assets $28,141 $31,908
------------ ------- -------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities
-------------------
Accounts payable - trade $1,113 $1,825
Revenues and royalties due to others 368 496
Short-term debt 1,545 180
Current portion of asset retirement obligations,
at fair value 108 138
Other current liabilities, including $7 million
at fair value in 2009 309 496
------------- --- ---
Total current liabilities 3,443 3,135
------------------------- ----- -----
Long-term debt 5,848 5,661
Asset retirement obligations, at fair value 1,511 1,347
Other long-term liabilities 977 1,026
Deferred income taxes 1,709 3,679
--------------------- ----- -----
Stockholders' equity
--------------------
Common stock 44 44
Additional paid-in capital 6,410 6,257
Retained earnings 7,017 10,376
Accumulated other comprehensive income 1,182 383
-------------------------------------- ----- ---
Total Stockholders' Equity 14,653 17,060
-------------------------- ------ ------
Total Liabilities and Stockholders' Equity $28,141 $31,908
------------------------------------------ ------- -------
Common Shares Outstanding 444 444
--- ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) Nine Months Ended September 30,
-------------------------------
2009 2008
---- ----
Cash Flows From
Operating Activities
--------------------
Net (loss) earnings $(3,146) $4,668
Net loss (earnings) from discontinued
operations (16) (914)
Adjustments to reconcile earnings (loss) from
continuing operations to net cash provided by
operating activities:
Depreciation, depletion and amortization 1,782 2,466
Deferred income tax (benefit) expense (2,203) 1,391
Reduction of carrying
value of oil and gas properties 6,516 -
Net unrealized loss (gain) on oil and gas
derivative financial instruments 169 (140)
Other noncash charges 199 217
Net (increase) decrease in working capital (1) 339
Decrease (increase) in
long-term other assets 20 (61)
(Decrease) increase in
long-term other liabilities (33) 94
--------------------------- --- ---
Cash provided by operating
activities - continuing operations 3,287 8,060
Cash provided by operating
activities - discontinued operations 5 121
------------------------------------ --- ---
Net cash provided by operating activities $3,292 $8,181
----------------------------------------- ------ -------
Cash Flows From Investing Activities
------------------------------------
Proceeds from sales of property and equipment 23 116
Capital expenditures (4,184) (6,184)
Purchases of short-term investments - (50)
Sales of long-term and short-term investments 6 297
--------------------------------------------- --- ---
Cash used in investing
activities - continuing operations (4,155) (5,821)
Cash provided by investing
activities - discontinued operations 1 1,859
------------------------------------ --- -----
Net cash used in investing activities $(4,154) $(3,962)
------------------------------------- ------- -------
Cash Flows From Financing Activities
------------------------------------
Proceeds from borrowing of
long-term debt, net of issuance costs 1,187 -
Credit facility repayments - (3,191)
Credit facility borrowings - 1,741
Net commercial paper borrowings (repayments) 363 (1,004)
Debt repayments (1) (1,031)
Redemption of preferred stock - (150)
Proceeds from stock option exercises 19 109
Repurchases of common stock - (665)
Dividends paid on common and preferred stock (213) (216)
Excess tax benefits related to
share-based compensation 6 58
------------------------ --- ---
Net cash provided by (used in)
financing activities $1,361 $(4,349)
-------------------- ------ -------
Effect of exchange rate changes on cash 29 (47)
--------------------------------------- --- ---
Net increase (decrease) in
cash and cash equivalents 528 (177)
Cash and cash equivalents at beginning of period
(including cash related to assets held for sale) 384 1,373
-------------------------------- --- -----
Cash and cash equivalents at end
of period (including cash related
to assets held for sale) $912 $1,196
------------------------ ---- ------
DRILLING ACTIVITY Quarter Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Exploration Wells Drilled
-------------------------
U.S. 2 4 11 21
Canada - 18 29 76
International 6 - 7 7
------------- --- --- --- ---
Total 8 22 47 104
----- --- --- --- ---
Exploration Wells Success Rate
------------------------------
U.S. 50% 75% 73% 71%
Canada - 94% 100% 95%
International 33% - 29% 0%
------------- --- -- --- ---
Total 38% 91% 83% 84%
----- --- --- --- ---
Development Wells Drilled
-------------------------
U.S. 135 430 589 1,207
Canada 87 171 230 430
International 3 13 16 35
------------- --- --- --- ---
Total 225 614 835 1,672
----- --- --- --- -----
Development Wells Success Rate
------------------------------
U.S. 98% 98% 99% 98%
Canada 100% 98% 99% 99%
International 100% 92% 100% 91%
------------- --- --- --- ---
Total 99% 98% 99% 98%
----- --- --- --- ---
Total Wells Drilled
-------------------
U.S. 137 434 600 1,228
Canada 87 189 259 506
International 9 13 23 42
------------- --- --- --- ---
Total 233 636 882 1,776
----- --- --- --- -----
Total Wells Success Rate
------------------------
U.S. 97% 97% 98% 98%
Canada 100% 98% 99% 99%
International 56% 92% 78% 76%
------------- --- --- --- ---
Total 97% 97% 98% 97%
----- --- --- --- ---
September 30,
-------------
2009 2008
---- ----
Number of Company Operated Rigs Running
---------------------------------------
U.S. 22 92
Canada 8 12
International - 2
------------- --- ---
Total 30 106
----- --- ---
CAPITAL EXPENDITURES (in millions)
Quarter Ended September 30, 2009
U.S. U.S.
Onshore Offshore Canada International Total
------- -------- ------ ------------- -----
Capital Expenditures
--------------------
Exploration $24 39 7 42 $112
Development 308 163 218 31 720
----------- --- --- --- --- ---
Exploration and
development capital $332 202 225 73 $832
Capitalized G&A 94
Capitalized interest 21
Discontinued operations 1
Midstream capital 56
Other capital 32
------------- ---
Total Capital
Expenditures $1,036
------------- ------
CAPITAL EXPENDITURES (in millions)
Nine Months Ended September 30, 2009
U.S. U.S.
Onshore Offshore Canada International Total
------- -------- ------ ------------- -----
Capital Expenditures
--------------------
Exploration $74 153 76 151 $454
Development 1,438 401 597 91 2,527
----------- ----- --- --- --- -----
Exploration and
development capital $1,512 554 673 242 $2,981
Capitalized G&A 302
Capitalized interest 67
Discontinued operations 5
Midstream capital 206
Other capital 76
------------- ---
Total Capital
Expenditures $3,637
------------ ------
NON-GAAP FINANCIAL MEASURES
Cash flow before balance sheet changes and free cash flow are Non-GAAP financial measures. Devon believes cash flow before balance sheet changes is relevant because it is a measure of cash available to fund the company's capital expenditures, dividends and to service its debt. Devon believes free cash flow is relevant because it is a measure of cash available to pay dividends, service debt or buyback stock. Cash flow before balance sheet changes and free cash flow are used by certain securities analysts as a measure of Devon's financial results.
RECONCILIATION TO GAAP
INFORMATION Quarter Ended Nine Months Ended
(in millions) September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Net Cash Provided By
Operating Activities
(GAAP) $1,215 $2,995 $3,292 $8,181
----- ------ ------ ------ ------
Changes in assets and
liabilities -
continuing operations (13) (393) 14 (391)
Changes in assets and
liabilities -
discontinued operations 2 27 (5) 88
----------------------- --- --- --- ---
Cash flow before balance
sheet changes
(Non-GAAP) $1,204 $2,629 $3,301 $7,878
---------- ------ ------ ------ ------
Less:
Capital expenditures 1,036 2,364 3,637 6,351
-------------------- ----- ----- ----- -----
Free cash flow (Non-GAAP) $168 $265 $(336) $1,527
------------------------ ---- ---- ----- ------
Devon believes that using net debt for the calculation of "net debt to adjusted capitalization" provides a better measure than using debt. Devon defines net debt as debt less cash and cash equivalents. Devon believes that because cash can be used to repay indebtedness, netting cash and cash equivalents against debt provides a clearer picture of the future demands on cash to repay debt.
RECONCILIATION TO GAAP INFORMATION
(in millions) September 30,
-------------
2009 2008
---- ----
Total debt (GAAP) $7,393 $4,837
Adjustments:
Cash and cash equivalents 905 1,194
------------------------- --- -----
Net Debt (Non-GAAP) $6,488 $3,643
------------------ ------ ------
Total debt $7,393 $4,837
Stockholders' equity 14,653 25,290
-------------------- ------ ------
Total Capitalization (GAAP) $22,046 $30,127
-------------------------- ------- -------
Net debt $6,488 $3,643
Stockholders' equity 14,653 25,290
-------------------- ------ ------
Adjusted Capitalization (Non-GAAP) $21,141 $28,933
--------------------------------- ------- -------
SOURCE
Investors
Zack Hager, +1-405-552-4526
or
Media
Chip Minty, +1-405-228-8647
both of Devon Energy Corporation